Share This Story!

Investment board OKs disputed transfer of funds

The state Board of Investments on Tuesday approved a resolution to transfer $14.7 million from the Montana State Fund to the state’s Fire Suppression fund while a lawsuit is pending challenging such action.

HELENA — The state Board of Investments on Tuesday approved a resolution to transfer $14.7 million from the Montana State Fund to the state’s Fire Suppression fund while a lawsuit is pending challenging such action.

The resolution approved 7-0 by the board tells staff to move the money by April 1.

It comes after lawmakers passed Senate Bill 4 in the special session in November, requiring the board, which manages state fund money, to charge a 3 percent management fee to Montana State Fund, which has about $1.5 billion in assets, to fix a $227 million budget shortfall. It would raise about $15 million a year over the next two years.

State fund members objected to the move and sued. Then Gov. Steve Bullock appointed two new members whose terms had expired, and they reversed their decision.

Since then, a group of businesses led by Rep. Greg Hertz, R-Polson, who serves as speaker pro tempore, have filed the lawsuit calling the action unconstitutional.

Montana State Fund is the state’s largest workers’ compensation provider. It insures nearly 26,000 businesses.

Tuesday’s move by the board seemed to be an abundance of caution.

In a Feb. 13 memo to the board, David Ewer, executive director of the Montana Board of Investments, said the resolution was “technically unnecessary,” but that the transfer was controversial “and that certain matters are significantly outside of the board’s normal duties and mission scope …”

He added “staff believes a resolution is the appropriate vehicle for board action and for the public record.”

Board vice chair Karl Englund was told there was no temporary restraining order or court action to prevent the board from moving forward.

Legal counsel Amy Barnes said if the board proceeded it would be following the law at this point.

Richard Miltenberger, a former Montana State Fund member who was not reappointed to the board by Bullock, told board of investment members they should ask themselves two questions: What services will the Board of Investments provide the Montana State Fund that it was not providing before SB 4 and what services will it stop providing when the law expires in two years.

State Sen. Scott Sales, R-Bozeman, the senate president, is a non-voting member of the board. He said he opposed SB 4 from a practical standpoint in the special session, adding that when lawmakers have raided such funds before, it has not worked out for the state.

In January, the Montana State Fund Justice Coalition filed a lawsuit alleging a breach of contract and violation of the U.S. and Montana Constitution. The suit, which includes 10 plaintiffs, was filed in Montana's 20th District Court in Lake County against the Montana State Fund, the Board of Investments and state.